3 a Velvet Vision the Economic Liberalization (And Liberation) of the Czech Republic

3 A Velvet Vision The Economic Liberalization (and Liberation) of the Czech Republic There is today in the world a dominant discourse. This dominant discourse often has the manic, jubilatory and incantatatory form that Freud assigned to the so-called triumphant phase of mourning work. The incanta- tion repeats and ritualizes itself, it holds forth and holds to formulas, like an animistic magic. To the rhythm of a cadenced march, it proclaims: Marx is dead, communism is dead, very dead and along with it its hopes, its discourse, its theories and its practices. It says: long live capitalism, long live the market, here’s to the survival of economic and political liberalism! —Jacques Derrida, Specters of Marx For a neoliberal discourse is not a discourse like others. [I]t is a “strong discourse” which is so strong and so hard to ‹ght because it has behind it all the powers of a world of power relations which helps to make it as is, in particular by orienting the economic choices of those who dominate economic relations and so adding its own—speci‹cally symbolic—force to those power relations. —Pierre Bourdieu, Acts of Resistance In the immediate afterglow of socialism’s downfall, no population in the postsocialist world embraced free-market ideology with greater fervor than the Czechs. Their enthusiasm appeared to be well rewarded, with a development trajectory hailed internationally throughout much of the 1990s as exemplary. While the majority of postsocialist states encountered substantial logistical dif‹culties and popular resistance to economic liberalization, Czechoslovakia (and subsequently the Czech Republic) seemed able to successfully traverse the complexities of this process and concomitantly to maintain public support for its economic reform strategy. Even the Czech Republic’s 1997–99 recessionary woes 41 42 MARKET DREAMS did not derail the country’s commitment to a capitalist course or the public’s con‹dence in it. Throughout the early to mid-1990s, many observers attributed the relative social peace of the Czech(oslovak) transition to the discursive ef‹cacy of its political leaders, especially Václav Klaus (the main strate- gist of the country’s economic reform plan), in engaging the broader populace with the imperatives of marketization. For example, in an International Monetary Fund (IMF) occasional paper, Biswajit Baner- jee and colleagues reported that the Czech “government has been remarkably successful in building and maintaining proreform consensus among the population” (1995:24). In its 1996 World Development Report, the World Bank highlighted the Czech government’s exception- ality in effectively communicating to its citizenry the “reasons for change” and the “progress to date” (1996:11). In these initial stages, the institutional bastions of neoliberalism (e.g., the IMF and World Bank) as well as many observers, international and domestic, construed the practice of economic reform in the Czech(oslovak) case as wholly neoliberal in design. These observers saw an adherence to neoliberal orthodoxy as typifying the discourse and practice of the country’s economic transition. In these early assessments, the country’s success in quelling popular resistance was ascribed to the conjoining of an ardently neoliberal discourse with an assumed neoliberal practice. Here, discourse and practice appeared to align, with the latter reinforcing the former. More recent analyses have exposed a disjuncture between these two dimensions, citing an unquali‹ed neoliberalism manifest in discourse but a hybrid of neoliberal and social democratic measures employed in practice. In such later appraisals, it was practice—in the form of a quali‹ed neoliberalism—that worked to mitigate the social effects of economic transformation which deserved the major credit for insuring popular consensus (Danger‹eld 1997; Elster et al. 1998; Oren- stein 2001; Stark and Bruszt 1998). While earlier and later interpretations of Czechoslovakia’s (later the Czech Republic’s) economic transformation signi‹cantly diverge in their readings of its practicalities, they converge in their common understanding of the neoliberal nature of its discourse. In neither instance, however, have the workings been fully explicated; the salience of this discourse in cultivating Czechs’ consent also has not been suf‹ciently considered. This chapter seeks primarily to consider the A Velvet Vision 43 contours and centrality of this discourse in generating Czechs’ alle- giance to the free market. In this chapter, I draw on a variety of discursive materials (e.g., speeches, newspaper articles) in public circulation during the 1990s to reveal the composition of discourse that manifests as a metanarrative about the market. With socialism’s demise, the countries of Central and East Europe (CEE) “fell into a world dominated . by neoliberal discourse” (Orenstein 2001:1). As this discourse penetrated postsocialist spaces, political elites mobilized it to legitimate a new economic order. In this mobilization, it achieved metanarrative stature. I argue that this metastory in the Czech milieu is fashioned to appeal to the cultural aspirations and historical sensitivities of the Czech people. At its core is a primordial story about good overcoming evil. Anchored in the Czech context, the consequent rendition is a potent tale whose persuasive power extends well beyond the country’s national boundaries to an international audience. Much scholarship on the Czech(oslovak) transition has not fully grasped the fortitude of this market metanarrative. Its early appraisers, I suggest, fell prey to it, and consequently had dif‹culty seeing particular facets of the Czech(oslovak) transition. While later assessors saw beyond this transition tale, they failed to com- prehend that this interpretive distance was not available to all—that is, to the Czech populace. Here, I retell this transition tale, making appar- ent its practical and discursive contingencies and complexities. In this rendition, Czech exceptionalism is solidly girded but signals the poten- tial power of the free market, metanarratively rendered, not only in the postsocialist world but well beyond. Global Referents In its global assessments, the systemic communist-capitalist rivalry typifying much of the twentieth century had given way to a new unipolar reality with capitalism victorious. Francis Fukuyama boldly declared the “end of history” in light of the “total exhaustion of viable systematic alternatives to economic and political liberalism” (1989:3). While Fukuyama’s apocalyptic declaration was perhaps too extreme, his work reveals the prevailing mind-set at the end of the twentieth century. Mar- ket triumphalists reveled in communism’s defeat. Lacking any other 44 MARKET DREAMS “serious theoretical contender,” capitalism rose up to ‹ll the void cre- ated by communism’s demise (De Boer-Ashworth 2000:1). It was not, however, just any capitalism that conquered communism; rather, it was a neoliberal brand of capitalism with grand aspirations of self-regulat- ing free markets. In Michael Kennedy’s words, “transition . anchored a new liberal hegemony in the world” (2002:1). Heavily propagated by the Reagan administration in the United States and the Thatcher government in the United Kingdom, neoliberal orthodoxy reigned hegemonic during the 1980s. In its advocacy of market-led rather than state-led development (i.e., liberalism rather than statism), it revolutionized development economics. For more than a quarter century, British economist John May- nard Keynes’s ideas about the necessity for state interventionism in economic processes to ensure economic growth held sway in the West. In the late 1970s, however, with the perceived inadequacy of economic growth in the United States and the United Kingdom, interest shifted away from Keynesian economics and toward the ideas of Austrian economist Fredrich A. von Hayek. While Keynes viewed the interventionist state as the “engine for market forces,” neoliberals, drawing on Hayekian economic theory, viewed states’ economic involvement as antithetical to market progress (Hersch and Schmidt 1996:14). The neoliberal agenda—with its goals of state deregulation and market liberalization—fundamentally rede‹ned the guidelines of Western capitalism, informing not only the mandates of (Western) advanced indus- trialized nations but also the mandates given to Third World developing nations by international ‹nancial and trade organizations such as the IMF and World Bank. For these lending institutions, neoliberalism translated into a formulaic, tripartite development strategy of liberalization, deregulation, and privatization that achieved wide cur- rency in the Third World during the 1980s.1 When neoliberalism failed to be the “panacea to the problem of Third World development,” neoliberalism’s disciples deemed countries’ application of and adherence to neoliberal mandates ›awed rather than blaming the policy pre- scriptions’ neoliberal underpinnings (Corbo 1991; De Boer-Ashworth 2000:43). For a postsocialist populace that attributed communism’s failure in 1. In some cases, a fourth element, stabilization, is included. A Velvet Vision 45 part to the excesses of government interference in the economy, neoliberalism had, as Jacques Hersch and Johannes Schmidt suggest, “natural appeal” (1996:9). While some scholars argue that the command capitalism of East Asian nations (e.g., Singapore, Hong Kong) was better suited to the CEE countries, the allure of neoliberal

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